We all love to see the before and after on home remodeling shows and the biggest appeal seems to be updated kitchens and master baths. It’s all about the “wow” factor! But when you are selling your home, it’s important to consider (in business terms), the ROI, which is Return On Investment. Cost versus value is clearly a tricky thing. According to the National Association of REALTORS, “A house that sparkles on the surface will sell faster than its shabby neighbor, even though both are structurally well-maintained… Buyers feel more comfortable purchasing a well-cared for home because if what they can see is maintained, what they can’t see has probably also been maintained.”
Considering potential renovations requires research. Personally, I’d love to have a luxurious master bath with heated Travertine tile floors, mosaic accents in the over sized fully glass-enclosed shower with wall jets, not to mention those sexy above counter sinks, but is it worth the investment? Appraisers care more about the condition of the house and property, square footage (overall living space), number of bedrooms and baths, and what your neighbor’s home sold for, not necessarily the latest bathroom renovation . It’s all about function over form.
The Remodeling 2012–13 Cost vs. Value Report (www.costvsvalue.com), outlines which project give you the most bang for your buck! It may not all be so sexy, but when you’re ready to sell, getting more return for your investment makes you feel much more warm and fuzzy about the deal.
Entry Door Replacement (Steel): Not sexy at all, but this simple update costing an average of $1,100 gives you an 85% return, that’s over $900 back. And in the meantime you have more security and an entryway that could appeal to potential buyers.
Deck Addition (Wood): This is definitely a more fun add-on, but may not be on your remodel list. This renovation has an average 77% return, with the average cost around $9,000 and a re-sale value of $7,000. It’s definitely something to consider. Using composite over wood elevates the cost significantly (average$15,000 ) and your return percentage drops to 67%. When considering this type of remodel, wood may provide the best return.
Minor Kitchen Remodel: When I saw this, my big question is “What does ‘minor’ mean?” Essentially this is a re-facing of the kitchen, keeping all the structure of the current kitchen, replacing cabinet facings (doors, drawers and hardware), updating counter tops, sink and faucet, new energy efficient oven and cook top, as well as repainting. This “minor” kitchen remodel could cost an average of $18,500 with over 75% return – potentially $14,000 back in your pocket when you sell.
Siding Replacement (Vinyl): This is not an exciting conquest when looking at remodeling options, but when you are selling your home, consider what an inspector will be looking at for your prospective buyer. No one wants to come into a home with a need for hefty updates, especially replacing siding. If your house needs it, it’s definitely value added. Another 73% return with an average cost of $11,000 adding $8,000 in home value.
Basement Remodel: More “livable” space always increases value. While this is the most expensive remodel yet, it provides great return for dollars spent. Extra living space immediately adds value, but a finished basement can be many things to many people. It could be a second/separate living space for family. It could be a great place to entertain. A place to send your kids to watch movies, or to get away from your kids. Possibilities are virtually limitless. This being an extensive project with extensive costs (average $60,000), this would be a great option for someone looking to sell down the road. Get some of that value for yourself and then hopefully get it back at about 70% return when you sell.
Bottom line, your remodeling plans need to be something that will make you happy now as well as help you sell later because in most cases you won’t get 100% of your investment back. With all renovations to your home, your return will vary from buyer to buyer as well as from one location to the next. It’s important to discuss your desired updates with a respectable contractor. And when considering these renovations for resale value, it’s even more important to discuss with your local real estate professional. They have the best grasp of what you can gain based on the renovation and the buyers market in your area.